The Mozambican economy has resumed high levels of growth, after the setback
caused by catastrophic flooding in the year 2000, Finance Minister Luisa Diogo
told reporters on 13 September. She said that, despite further flooding in the
central provinces between February and April, in the first six months of this
year output grew by 14.9 per cent when compared with the same period in 2000.

This growth rate is much higher than the ten per cent or so that was initially
expected. A huge contribution to Mozambique's renewed economic growth has been
made by the MOZAL aluminium smelter on the outskirts of Maputo, now operating
at its full capacity of 250,000 tonnes of aluminium ingots a year. Diogo said
that without the MOZAL figures, economic growth was 10.9 per cent.

The importance of MOZAL is even clearer from the export figures: the total
value of Mozambican exports from January to June was $307 million. Aluminium
produced at MOZAL accounted for 61 per cent of this ($186 million). Indeed,
without MOZAL exports would have shown a fall of five per cent when compared
with the first half of 2000.

Diogo said that agriculture had grown by 5.2 per cent, with major contributions
made by cotton, copra and sugar cane. but there had been a decline of between
one and two per cent in maize production. This led to "a certain concern
about food security", she said, particularly since many peasants were tending
to sell all their maize - meaning that in a few months time they might have
none left in their barns to feed themselves.

The construction industry showed a growth of 50.6 per cent. Diogo said this
was largely because reconstruction after the 2000 floods is reaching its peak
this year.

There was an increase of 50 per cent in rail traffic - this is simply due to
the resumption of traffic on the railways in the southern provinces which had
all been severely disrupted by flooding last year.

Sugar and textile sectors struggle

But some industrial sectors were in serious difficulty, notably textiles, where
most of the major plants are at a standstill or producing at a small fraction
of their installed capacity.

The country's sugar mills and beverage companies were in trouble too, but for
a very different reason - they are facing fierce competition from contraband
flowing over the borders, particularly from Zimbabwe. Smuggled Zimbabwean soft
drinks are posing a major threat to the Coca-Cola factory in the central city
of Chimoio, she said.

Smugglers are benefiting from the Zimbabwean government's exchange policy.
They are playing on the vast differential between the official and the parallel
exchange rates for the Zimbabwean dollar, in order to buy up Zimbabwean produce
cheaply, and then sell it at a substantial profit in Mozambique.

Diogo said that there is now a coordinated effort involving the provincial
governments, the police and the customs service to staunch the flow of contraband.
She warned that customs would judge the true value of imports from Zimbabwe
by using a reference price, rather than simply accepting Zimbabwean invoices
thrust at them by the importers.

The government was also trying to tackle the porous nature of Mozambique's
borders. "We know we have lengthy frontiers and many routes by which contraband
enters", Diogo said. "Our work with the provincial and district authorities
is aimed at dealing with this".

She stressed the government's "full support" for the sugar industry,
which is particularly hard hit by contraband. She pointed to the importance
of the sugar plantations and mills in generating employment and thus reducing
poverty.

"We cannot just be a country of consumers, we must be a country of producers",
Diogo declared.

Action to protect Metical

Diogo said that inflation in the first half of the year stood at 5.1 per cent,
but by August it had reached nine per cent. As for the Mozambican currency,
the metical, it had devalued by 24.9 per cent between January and June.

She said the metical was damaged by the fact that about 50 per cent of all
deposits in Mozambican banks are denominated in foreign currency. "This
creates a vicious circle", she said. Nonetheless, she thought that the
measures taken by the central bank were working, and the currency was stabilising.

Restrictive monetary measures were in place, and the central bank was trying
to mop up excess liquidity, through issuing treasury bonds and an increase in
the compulsory reserves that the commercial banks must hold with the Bank of
Mozambique.

Diogo stated that the government was having some success both in collecting
taxes and holding back expenditure. Thus tax collection from January to June
was 4.8 per cent higher than the planned figure. Taxes on profits and personal
income were a remarkable 15.6 per cent higher than the target figure (which
would seem to indicate very substantial evasion of corporation tax in the past).
Total government expenditure, including debt servicing, Diogo said, had been
held to just 95.6 per cent of the target.

Although the ruling Frelimo Party guides the Mozambican government in implementing
its programme, the party and the government must be viewed as separate entities,
President Joaquim Chissano insisted on 16 September.

Speaking at the end of a three day national conference of Frelimo cadres, held
in the central city of Beira, President Chissano said "the debates have
shown that, in the multi-party regime under which we live, we must always bear
in mind the difference between the Party and the government".

Although Frelimo guided the government, "the internal dynamic of the Party
must be independent from that of the government", he stressed.

There have been repeated complaints from some sections of Frelimo that the
government goes its own way, regardless of Party guidelines. President Chissano
did not seem to agree. "The Party implements its policy through the government",
he said. "The government is an instrument of the Frelimo Party, the product
of victory in the last elections. The government's five year programme is nothing
but a translation of the Party programme that was accepted and legitimised by
the popular vote".

Implementation of the government programme "is the task of all party members
and sympathisers, and of the people in general", he added. "Successes
in governance are victories for the Party and its members".

President Chissano stressed that Frelimo's top priorities remain "the
struggle against absolute poverty, the reduction of regional imbalances, and
rural development".

He also called for establishing "an environment favourable for both public
and private investment, particularly in the countryside. At the same time, we
must promote the development of a solid, economically stable and patriotic business
class, which is committed to fighting absolute poverty".

He called for a redoubled battle against crime and corruption. "To fight
crime without respite is also to strengthen the stability which is essential
for our daily life and for the rapid socio-economic development of our country",
President Chissano declared. "Let us close ranks as citizens and as public
or private institutions so that crime may be firmly combated in our society".

President Joaquim Chissano has written to his US counterpart, George Bush,
extending "heartfelt condolences" to the American people, and to the
families of the victims of the terrorist outrages in New York and Washington.

In his message, written in English, President Chissano said he had learnt of
the attacks "with great distress and shock...This horrible act of unprecedented
proportions has deeply disturbed the conscience of all mankind".

He continued that "Nothing can justify the resort to acts of terrorism
for whatever reasons or motivations".

The attacks, in which hijackers seized control of commercial airliners and
turned them into bombs, flying them into the World Trade Centre in New York
and the Pentagon in Washington, was an assault "against the basic norms
of behaviour and of international law", added the President. "I would
like to express in the strongest terms my condemnation of such inhuman acts".

President Chissano concluded his message with the hope that "the ongoing
efforts to identify and bring to justice those responsible for these acts will
be successful".

The Health Ministry is working out ways to implement African strategies to
combat malaria, and particularly to minimise the mortality rate from this disease.

The Health Ministry's director for the national malaria programme, Samuel Mabunda,
said that the African strategy, adopted in 1997, aims to reduce by 50 per cent
the death rate from malaria by the year 2010.

Speaking to AIM, Mabunda explained that there are two components to the strategy,
namely the control of the mosquitos that spread the disease, and health education.
"We hope to attain, by 2010, a 45 to 50 per cent reduction in the effects
of malaria in the country", said Mabunda, adding that this measure is a
major challenge for his ministry in the coming decade.

As a means to fight against mosquitos, Mabunda called for the spraying of homes
and of the areas where mosquitos breed. "For the current year, spraying
of homes with insecticide will start in October", he said. Mabunda said
the necessary funds are now available, but he did not specify the amounts.

As for strains of malaria that are resistant to the standard drugs, Mabunda
said this "will call for a change of behaviour on the part of people, and
preventive education". He explained that most cases of resistance are caused
by not following strictly the medical prescriptions, saying that some patients
interrupt their treatment when they feel better.

Currently, malaria infection rates in Mozambique are estimated at 4.5 per cent
in the cities, and 7.4 per cent in the rural areas.

Mozambique's main opposition party, Renamo, has postponed its congress, the
first to be held since the end of the war of destabilisation almost nine years
ago.

Initially, the congress was to have been held on 24 September in Nampula. But
on 12 September a member of the Renamo Political Committee, Vicente Ululu, told
a press conference that the event has been postponed until late October.

The reason Ululu gave for the postponement was that so far Renamo has only
been able to hold conferences to elect congress delegates in two of Mozambique's
11 provinces (Maputo and Gaza).

Renamo says that the forthcoming congress will be its fourth, and that the
other three were held during the war.

The Zimbabwean tea company, Tanganda Tea, has requested some 1,000 hectares
of land in the district of Mossurize, in the central Mozambican province of
Manica, intended for the planting of tea, according to Agriculture Minister,
Helder Muteia.

Muteia told AIM that an area close to Espungabera, the Mossurize district capital,
near the frontier with Zimbabwe, has already been identified.

"The Zimbabwean company requested a 1,000-hectare area for the production
of tea, but apart from this, we'll probably have another 1,000 hectares for
peasant farmers who will benefit from extension services provided by the Zimbabweans",
he said.

The measure is aimed at promoting development not only through the creation
of jobs but also through giving the peasant farmers a capacity to produce tea.

A representative of the company met recently with Muteia to discuss the details
of the project. Muteia said Tanganda wanted to be informed on the fiscal incentives
and facilities that the Mozambican government offers for companies that wish
to carry out such projects, aspects which "are envisaged in the investment
law".

There are about 331 peasant farmers in Mossurize who are already involved in
growing tea. Muteia said the farmers started clandestinely in 1995 since they
mistakenly thought they were planting a forbidden crop.

Data from the Agriculture Ministry forecast a 35 per cent growth in tea production
throughout Mozambique this year, in comparison with 2000. This is mainly thanks
to a programme to relaunch the crop in Gurue district, in Zambezia province.
Some 5,932 hectares of tea are currently being cultivated in Gurue.

The food security evaluation mission that worked throughout August in six central
and southern provinces has recommended the urgent drafting of an integrated
plan of action to mitigate the effects of food shortages in parts of the country.

The mission discovered that there are places likely to suffer hunger due to
insufficient rainfall, destruction of crops by pests, poor soils, and the fact
that many families resettled after flooding in central Mozambique have not yet
fully resumed their agricultural activities.

"Although we supplied seeds and tools to relaunch farming activity after
the floods, the harvests from the second planting season were poor due to the
above factors", said Joao Zamissa, spokesperson of the country's relief
agency, the National Disaster Management Institute (INGC).

Zamissa told AIM on 13 September that the Plan of Action should be the short
term measure to be taken. Owing to its urgent nature, the Plan of Action has
to be presented during the next inter-ministerial meeting, scheduled for 26
September, when the forecasts for the next rainy season will be disclosed.

He said that the plan will be drafted through the coordination of the Agriculture
Ministry, the Ministry of Industry and Trade, the INGC, and the United Nations
World Food Programme (WFP).

Preliminary data indicate that about 370,000 people are likely to be affected
by food shortages in the coming months, mostly in the south and centre of the
country.

During the visits the mission did not come upon any famine-related deaths.
However, it found that there are "famine warning spots" in some areas,
mainly in those hit by the floods and those considered vulnerable to drought.

The boards of the World Bank and the IMF may approve later this month the Mozambican
government's "Action Plan for the Reduction of Absolute Poverty" (PARPA).
This is a crucial step towards further debt relief for Mozambique under phase
two of the HIPC (Heavily Indebted Poor Countries) initiative, or "Enhanced
HIPC".

Since their sudden discovery of poverty a couple of years ago, the Bretton
Woods institution have demanded that effective programmes to deal with poverty
must be in place before any country qualifies for debt relief. When this was
announced, the Mozambican government already had a poverty reduction programme,
which it was forced to rewrite.

A provisional version of PARPA was drawn up in 2000, and this was enough for
Mozambique to become eligible for enhanced HIPC. The definitive PARPA is now
available, and has been submitted to the World Bank. The final document was
supposed to be drawn up in consultation with civil society, but some Mozambican
NGOs claim they did not participate fully in this process. However, the NGOs,
who work under the umbrella of the Mozambique Debt Group, are most unlikely
to do anything that will hinder further debt relief.

Originally it was hoped that the "conclusion point" for enhanced
HIPC - the moment at which the debt relief actually takes effect - would be
in March. But the crisis rocking the Mozambican financial sector, caused by
the enormous losses run up by the two privatised commercial banks, the BCM and
Austral, led to delays.

The latest World Bank figures, quoted by the newspaper "Metical",
indicate that with HIPC-2 Mozambique's debt service ratio (debt payments as
a percentage of exports of goods and services) will fall to five per cent in
2002. Without HIPC the figure would have been 20 per cent.

In December 1998, Mozambique's total debt stock stood at $2.73 billion - $1.97
billion of this is to be wiped out under the two stages of HIPC, leaving a total
debt stock of about $760 million.

The World Bank predicts that Mozambique's debt-stock-to exports ratio will
fall to 99 per cent in 2003, 75 per cent in 2010, and 55 per cent in 2017. But
these predictions depend on a steady growth in export revenue, and with the
volatility of prices for primary products, this is far from guaranteed.

The Health Ministry now estimates that 12.2 per cent of the population aged
between 15 and 49 are infected with HIV, the virus that causes the lethal disease
AIDS.

Although this looks rather better than the earlier estimate of a 16 per cent
infection rate, the difference is entirely due to improved statistics, and does
not mean that the epidemic is coming under control.

Indeed, in cities where the statistical series goes back several years (Maputo,
Beira, Chimoio and Tete) the trend remains remorselessly upwards. The latest
figures indicate a worsening of the epidemic, with health centres in Beira and
Chimoio now reporting an HIV prevalence rate of around 25 per cent.

The problem with earlier estimates of the national HIV/AIDS situation was the
small sample on which they were based. Maputo was used to estimate HIV prevalence
in the south of the country, and Beira, Chimoio and Tete for the centre.

Up until 2000 health centres in these cities were the only sentinel sites in
operation, testing pregnant women for HIV (there is a mathematical model, widely
used internationally, which can estimate prevalence rates throughout the adult
population from the figures for pregnant women).

But there were no sentinel sites anywhere north of the Zambezi, and none in
any rural areas. In its earlier estimates, the Health Ministry assumed that
the epidemic in northern Mozambican was 25 per cent worse than in the south.

The only statistics that existed, from a rapid assessment survey in Nampula
province, were discarded. These showed a prevalence rate of five per cent in
Nampula city, and 6.1 per cent in Monapo district: health officials thought
these figures were far too low, and should not be taken seriously because of
the small sample.

But now that there are 20 sentinel sites operating, 11 urban and nine rural,
and covering every province, their results indicate that the Nampula rapid assessment
was quite accurate.

Far from being worse than the south, the HIV prevalence in the northern three
provinces is less than half the infection rate in the south. It is the northern
provinces of Nampula, Niassa and Cabo Delgado that have pushed the national
HIV prevalence rate down to 12.2 per cent.

The latest figures, unveiled by the Health Ministry show a 5.7 per cent prevalence
rate in the north, 13.2 per cent in the south (Maputo city, Maputo province,
Gaza and Inhambane), and 16.5 per cent in the centre (Sofala, Manica, Tete and
Zambezia).

Arranging the 11 provinces from south to north, the prevalence rates, estimated
on the data from the 20 sentinel sites, are as follows:

Deputy National Health Director Avertino Barreto argued that population movements
are the main explanatory factor for the differential spread of HIV in the country.
Thus the central provinces are affected both by the massive return of refugees
from neighbouring countries at the end of the war of destabilisation, and by
two crucial transport corridors - the road and rail route from Zimbabwe to Beira,
and the Zimbabwe- Malawi road which runs through the middle of Tete.

In contrast, the northern three provinces are those with fewest returning refugees,
and no major international road transport route runs through them. The main
corridor, from the port of Nacala to Malawi, is exclusively a rail corridor.
Thus the north does not see the heavy traffic in trucks, and the accompanying
phenomena of roadside bars and prostitution, that characterise the Beira and
Tete corridors.

The main population movement in the south is migrant labour. The province that
makes the largest contribution to the export of labour to the South African
gold mines is Gaza, and health officials are sure this is closely linked to
the high HIV prevalence in Gaza.

The ministry hopes to refine the statistics still further by providing sentinel
site facilities in a further 14 health centres spread throughout the country
in the coming few months.

A group of allegedly disabled former soldiers have invaded and occupied another
stretch of land in the municipality of Matola, about 15 kilometres from Maputo.
This is the fourth time that former soldiers have illegally seized land in Matola,
doubtless encouraged by the failure of the authorities to take firm measures
against the earlier occupations.

The latest occupation is on land belonging to the Maputo General Union of Agricultural
and Livestock Cooperatives (UGC) in the Matola neighbourhood of Mussumbuluko.

On 10 September the UGC told AIM that the former soldiers had grabbed the land
last week, and were demarcating it into individual plots.

The disabled soldiers justify their lawlessness with a claim that the Matola
municipal council once promised to provide them with plots of land on which
to build their houses.